A research-driven, diversified portfolio of primarily European currency denominated high-yield corporate debt issued by below-investment-grade companies. We target consistent high income, investing in both existing and new issues.

European high yield bonds could face ongoing volatility in the coming weeks as the full scale of the impact from the coronavirus becomes clearer. However, we do not expect the same heightened liquidity concerns that we saw in March. Greater discrepancy between strong and weak credits could also create potential opportunities for research-based investors. European high yield valuations remain attractive, with spreads at levels that historically have delivered strong returns over one- and three-year time periods.

The English language commentary is available, with English language available at a later stage

European high yield bonds could face ongoing volatility in the coming weeks as the full scale of the impact from the coronavirus becomes clearer. However, we do not expect the same heightened liquidity concerns that we saw in March. Greater discrepancy between strong and weak credits could also create potential opportunities for research-based investors. European high yield valuations remain attractive, with spreads at levels that historically have delivered strong returns over one- and three-year time periods.

The coronavirus outbreak will continue to drive markets in the near term, with volatility likely to remain high. The impact on both the supply and demand sides of the economy will likely result in weakening corporate fundamentals, particularly in services and other exposed sectors. The economic outlook hinges on how the coronavirus outbreak evolves. If the outbreak eases in the first half of the year, we could see growth rebound later in 2020. However, we are aware of the risk of a more sustained spread.

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The concerted global central bank actions as well as increased fiscal stimulus could help limit the damage from a recession. The ECB's bond purchases could exceed EUR 80 billion per month, a substantial portion of which could go to corporate bonds. This could help mitigate further spread widening in European credit markets.

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While uncertainty will remain high for the coming months, volatility can create opportunities over the medium to longer term. Valuations are attractive on a historical basis. European high yield spreads reached levels at the end of March that historically have produced strong positive returns over one-year and longer time horizons.

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This selloff in European high yield was unprecedented in that it occurred over such a short time period, and we are aware the current environment remains highly uncertain. However, we believe a bottom-up approach can identify specific companies and sectors with strong fundamentals that could show relative stability through the current volatility. Once it is clear the situation is improving and societal restrictions are lifted, these names could represent attractive long-term opportunities when credit markets rebound. Overall, we believe it is essential for investors to remain selective through disciplined credit research while maintaining a long-term outlook.

Strategy

Fund Summary

The fund invests mainly in BB and B rated bonds, with the ability to purchase lower-quality securities when compelling valuation and risk/reward opportunities arise. The strategy integrates fundamental proprietary research at the corporate bond, sovereign and equity levels, thus providing a holistic view of a company’s capital structure and management team.

The European high yield market saw positive returns in April as risk markets rebounded sharply from the sell-off in March. Spreads ended April tighter as unprecedented global monetary and fiscal stimulus measures helped stabilise market conditions despite sharp drops in economic data. Within the portfolio, our holdings in the capital goods sector made the largest contribution, led by a U.S.-based small-cap industrial conglomerate, which maintains healthy liquidity that we believe can help it weather the current challenging backdrop. Our security selection in the basic industry and banking sectors also helped performance. The retail sector faces specific challenges in the current environment. However, our focus on names with stable business models and relatively healthy fundamentals helped our holdings outperform amid the improved backdrop. Conversely, our holdings in the transportation sector weighed on relative returns, including our exposure to names within the rental car industry which is suffering due to the coronavirus restrictions.

The English language commentary is available, with English language available at a later stage

The European high yield market saw positive returns in April as risk markets rebounded sharply from the sell-off in March. Spreads ended April tighter as unprecedented global monetary and fiscal stimulus measures helped stabilise market conditions despite sharp drops in economic data. Within the portfolio, our holdings in the capital goods sector made the largest contribution, led by a U.S.-based small-cap industrial conglomerate, which maintains healthy liquidity that we believe can help it weather the current challenging backdrop. Our security selection in the basic industry and banking sectors also helped performance. The retail sector faces specific challenges in the current environment. However, our focus on names with stable business models and relatively healthy fundamentals helped our holdings outperform amid the improved backdrop. Conversely, our holdings in the transportation sector weighed on relative returns, including our exposure to names within the rental car industry which is suffering due to the coronavirus restrictions.

The primary market remained active early in the period with record levels of issuance across January and February. However, as uncertainty escalated in February, the primary market came to a standstill over the final five weeks of the quarter.�We remained committed to identifying businesses with strong fundamentals that can weather a recessionary environment.�

Long-term credit convictions drive industry allocation

We maintain an overweight position in the cable and satellite TV sector, which benefits from secular trends in media consumption and stable revenue streams. This should help many names in the sector continue to withstand the near-term volatility and potentially be among the first to rebound when markets improve.� Conversely, we continue to hold a corresponding underweight to wirelines. We recognize that the current backdrop contains unique performance drivers and some sectors may behave differently to our long-term expectations. However, we do not chase short-term performance and believe that maintaining our convictions will deliver superior relative returns when markets normalize.

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Elsewhere, we are underweight to the automotive sector as it too faces heightened pressure amid the coronavirus disruption as well as longer-term industry disruption. We also maintain an underweight to many industries most at risk from government efforts to limit the spread of the coronavirus, such as retail and transportation.

B rated names continue to offer attractive relative value

While the coronavirus may lead to ongoing risk aversion in the near term, we believe some names, particularly in the B rated space, may become dislocated from their fundamentals, creating longer-term performance potential. Therefore, we maintain an overweight in B rated securities as we believe it is important to stay focused on identifying opportunities for alpha generation over the longer term.

Sovereign views and policies are key in current environment

While our investment process is primarily driven by bottom-up credit selection, proprietary sovereign views serve as a key input in our overall risk assessment. Our research-based flexible approach will be particularly important going forward. As different fiscal, monetary and health responses play out between countries, our ability to capture dislocations can help avoid further volatility while being best positioned for a potential recovery. �

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We expect to see an increase in European corporate defaults as the economic environment becomes more challenging. An additional layer of complexity is divergent bankruptcy policies and recovery rates across countries, highlighting the importance of an active approach to high yield investing. We believe our research in this area helps us account for the different levels of risk related to variance in default and recovery policies and where spread levels offer the best compensation for these risks. Our holistic view of capital structures and willingness to invest in holding companies is reflected in an allocation to companies domiciled in Luxembourg. Any non-euro-denominated bonds are fully hedged back to the euro.

The English language commentary is available, with English language available at a later stage

The primary market remained active early in the period with record levels of issuance across January and February. However, as uncertainty escalated in February, the primary market came to a standstill over the final five weeks of the quarter.�We remained committed to identifying businesses with strong fundamentals that can weather a recessionary environment.�

Long-term credit convictions drive industry allocation

We maintain an overweight position in the cable and satellite TV sector, which benefits from secular trends in media consumption and stable revenue streams. This should help many names in the sector continue to withstand the near-term volatility and potentially be among the first to rebound when markets improve.� Conversely, we continue to hold a corresponding underweight to wirelines. We recognize that the current backdrop contains unique performance drivers and some sectors may behave differently to our long-term expectations. However, we do not chase short-term performance and believe that maintaining our convictions will deliver superior relative returns when markets normalize.

�

Elsewhere, we are underweight to the automotive sector as it too faces heightened pressure amid the coronavirus disruption as well as longer-term industry disruption. We also maintain an underweight to many industries most at risk from government efforts to limit the spread of the coronavirus, such as retail and transportation.

B rated names continue to offer attractive relative value

While the coronavirus may lead to ongoing risk aversion in the near term, we believe some names, particularly in the B rated space, may become dislocated from their fundamentals, creating longer-term performance potential. Therefore, we maintain an overweight in B rated securities as we believe it is important to stay focused on identifying opportunities for alpha generation over the longer term.

Sovereign views and policies are key in current environment

While our investment process is primarily driven by bottom-up credit selection, proprietary sovereign views serve as a key input in our overall risk assessment. Our research-based flexible approach will be particularly important going forward. As different fiscal, monetary and health responses play out between countries, our ability to capture dislocations can help avoid further volatility while being best positioned for a potential recovery. �

�

We expect to see an increase in European corporate defaults as the economic environment becomes more challenging. An additional layer of complexity is divergent bankruptcy policies and recovery rates across countries, highlighting the importance of an active approach to high yield investing. We believe our research in this area helps us account for the different levels of risk related to variance in default and recovery policies and where spread levels offer the best compensation for these risks. Our holistic view of capital structures and willingness to invest in holding companies is reflected in an allocation to companies domiciled in Luxembourg. Any non-euro-denominated bonds are fully hedged back to the euro.

We maintain an overweight position in the cable and satellite TV sector, which benefits from secular trends in media consumption and enjoys stable, recurring revenues even during a more difficult macroeconomic backdrop. We remain underweight the automotive sector. Although the sector recovered from first-quarter weakness and outperformed in April, it faces heightened pressure linked to the coronavirus in the short-term as well as longer-term industry disruption.

The English language commentary is available, with English language available at a later stage

We maintain an overweight position in the cable and satellite TV sector, which benefits from secular trends in media consumption and enjoys stable, recurring revenues even during a more difficult macroeconomic backdrop. We remain underweight the automotive sector. Although the sector recovered from first-quarter weakness and outperformed in April, it faces heightened pressure linked to the coronavirus in the short-term as well as longer-term industry disruption.

The fund is fully hedged back to euro, although direct exposure may total less than 100%. It is important to note that there can be no assurances that the currency hedging employed will fully eliminate the shareholder's exposure to exchange rate fluctuations.

Source for performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures. Past performance is not a reliable indicator of future performance.

Daily performance data is based on the latest available NAV.

The Funds are sub-funds of the T. Rowe Price Funds SICAV, a Luxembourg investment company with variable capital which is registered with Commission de Surveillance du Secteur Financier and which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). Full details of the objectives, investment policies and risks are located in the prospectus which is available with the key investor information documents in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with the articles of incorporation and the annual and semi-annual reports (together “Fund Documents”). Any decision to invest should be made on the basis of the Fund Documents which are available free of charge from the local representative, local information/paying agent or from authorised distributors and via www.troweprice.com.

Please note that the Fund typically has a risk of high volatility.

Hedged share classes (denoted by 'h') utilise investment techniques to mitigate currency risk between the underlying investment currency(ies) of the fund and the currency of the hedged share class. The costs of doing so will be borne by the share class and there is no guarantee that such hedging will be effective.

The specific securities identified and described in this website do not represent all of the securities purchased, sold, or recommended for the sub-fund and no assumptions should be made that the securities identified and discussed were or will be profitable.

A full list of the currently issued Share Classes including Distributing, Hedged, and Accumulating Categories may be obtained, free of charge and upon request, from the registered office of the Company.

1 Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.

Citywire - where the Fund manager is rated by Citywire the rating is based on the manager's 3 year risk adjusted performance.

Historical data may not be a reliable indication of the future profile of the fund. The risk and reward profile shown is not guaranteed to remain unchanged and may shift over time. The lowest category does not mean a risk-free investment.

The Average Coupon, Maturity, Duration & Credit Quality measures are all calculated on a snapshot basis as of the stated month end, and consist of the weighted average details of the underlying securities of the fund.

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